France retains Fitch triple-A rating

Fitch Ratings stuck by its triple-A rating on France in a much-awaited review yesterday but predicted a peak in debt in 2014. It said this was at a level that was the maximum for a country with a top-notch credit grade.

Fitch is the only agency to retain a triple-A rating on the euro zone’s second-largest economy. It kept to its negative outlook, saying it indicated a slightly greater than 50 per cent chance of a future downgrade.

The ratings agency forecast growth of only 0.3 per cent in 2013, well below the 0.8 per cent on which the 2013 budget is built. It believes the government will not be able to narrow the public deficit as by much as it hopes.

Fitch managing director David Riley said the deficit was likely to come in at 3.6 per cent of national output, more than the 3 per cent targeted by the Hollande government of President François Hollande.

“The combination of weaker growth and slightly larger deficits compared to the government forecasts mean that we expect government debt to peak at 94 per cent (of GDP) in 2014 and gradually decline thereafter,” Mr Riley said.

The French government forecasts debt peaking in 2013 at 91.3 per cent of GDP and dipping in 2014 to 90.5 per cent.
- Reuters